Highest refurbishment pace

D. Carnegie & Co AB (publ) reports for the first quarter of 2017 a sharp increase in income from property management, SEK 60 million, compared with SEK 37 million for the first quarter of the previous year. This is a direct sign of improved financial results from the intensive investment activities performed by D. Carnegie & Co.

Earnings per share after tax were SEK 2.96 (3.47). The adjusted equity (EPRA NAV) increased 33 per cent compared to the same quarter 2016 and amounted to SEK 106.04 per share (79.79) as of 31 March 2017.

First quarter 2017

• Rental income increased to SEK 337 million (309)
• Net operating income of SEK 147 million (118)
• Income from property management increased to SEK 60 million (37)
• Changes in the value of investment properties of SEK 238 million (363)
• Changes in the value of derivatives of SEK 15 million (-76)
• Profit before tax amounted to SEK 297 million (263)
• Profit after tax amounted to SEK 229 million (246)
• Earnings per share amounted to SEK 2.96 (3.47) before dilution and amounted to SEK 2.91 (2.92) after dilution

Significant events during the first quarter

• D. Carnegie & Co has entered into an agreement with Fastighets AB Balder (publ) to acquire residential property portfolios in Arboga, Köping and Tranås. The property portfolios comprise 42 properties and 1,681 apartments. The property value is SEK 1,420 million and the agreed share purchase price amounts to SEK 1,040 million. The transaction is a share deal with closing scheduled for May 2017

Statement from the CEO 

In the first quarter of 2017 we have further industrialised our renovation process which has led to stricter cost control and successively lower rent losses from vacancies. The rate of refurbished apartments is also up from last year to 387 compared to 251 for same period last year and we expect this trend will continue.

The investments generate increased rent, and lower costs, the latter also due to more efficient operations. Rents for a comparable portfolio were up 5.1 per cent from first quarter last year, and costs 2.7 per cent lower. The result is a better net operating profit, up 25 per cent from first quarter 2016 to SEK 147 million, which strongly contributed to a significant uplift in value amounting to SEK 483 million during the first quarter. At least 70 per cent of the value increase is a result of improved net operating income and improved quality. Stronger net operating profit also generates a higher income from property management, up 60 per cent compared to same period last year to SEK 60 million for the first quarter 2017.

The increases in value are reflected in a 4 per cent increase in the equity (EPRA NAV) to SEK 106.04 per share during the quarter. The increased revenue and lower costs also improve the earnings capacity which is up SEK 66 million or 21 per cent to SEK 378 million on a 12-month basis compared to March 31, 2016 for comparable portfolio. For the complete property portfolio the earnings capacity has now reached SEK 407 million.

We have also continued our work on the soft values in our areas and have increased the number of D. Carnegie & Co employed safety hosts and organized more local events for young people. We have also expanded the number of winter associates in our areas.

In February, the company signed an agreement to acquire 1 700 apartments in Arboga, Köping and Tranås with a combined property value of SEK 1 420 million. The properties are very well located in their respective municipalities and will be valuable additions to our portfolio. The company has also decided to start procurement for its first new construction of a residential property. The building will hold 45 new apartments and be erected north west of Stockholm in Upplands Bro in the midst of our existing buildings. The development will not only improve cash flow but also increase the attractiveness of the area. We have also entered into agreements with municipalities in Stockholm County to start new zoning for our existing properties which will enable us to increase production of new housing.”

Stockholm, 28 April 2017

ULF NILSSON

CEO, D. Carnegie & Co

This information is information that D. Carnegie & Co AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 7 a.m. CEST on 28 February 2017. 

About D. Carnegie & Co

D. Carnegie & Co is a property company focusing on residential properties in the Greater Stockholm region and other growth areas. The company’s business concept is to own property portfolios slated for a gradual renovation of apartments in conjunction with the natural turnover of tenants. This can take place quickly and cost-efficiently thanks to extensive experience from the company's renovation method which, among other things, means that no evacuation needs to take place. In addition to this, the company creates value through the development of building rights in existing portfolios. The market value of the company’s properties amounted to SEK17,481 million on 31 March 2017. The total rental value amounted to SEK 1,390 million annually on 31 March 2017. The economic occupancy rate is high – vacancies are virtually non-existent. D. Carnegie & Co is listed on Nasdaq Stockholm.